Audit 403115

Finding 2025-003 Reporting – Internal Control and Compliance Over Reporting Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grant/Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-20-MC-06-0571; B-21-MC-06-0571; B-22-MC-06-0571 B-23-MC-06-0571; B-24-MC-06-0571 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): PR29, Cash on Hand Quarterly Reports – PR29 in the Integrated Disbursement and Information System (IDIS) reports the financial status of the grants and cooperative agreement funds and cash transactions using those funds. These reports are required to be submitted to the Department of Housing and Urban Development (“HUD”) on a quarterly basis, 30 days after the reporting period end date. The due dates of each quarterly report is noted below: Federal Funding Accountability and Transparency Act (FFATA) – Per 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, prime recipients of federal awards are required to report first-tier subawards of $30,000 or more to the FFATA Subaward Reporting System (FSRS.gov). Effective March 2025, subaward reporting is performed through SAM.gov (Subaward Reporting), which replaced the Federal Subaward Reporting System (FSRS). Such subaward information must be reported no later than the end of the month following the month in which the subaward was obligated. Condition: During the audit, we noticed that three out of four quarters of PR29 for CDBG and CDBG-CV were not filed within the deadline, as shown below: During our review of the City's compliance with FFATA reporting requirements, we selected four subrecipient contracts issued on July 1, 2024, each with an individual obligation amount equal to or greater than $30,000. We noted that all four selected subawards, the City had not submitted the required reports to the FSRS, which was the active reporting system at the time of obligation. Furthermore, as of the audit date, these records had not been updated or migrated into the current SAM.gov reporting module. Cause: The delays in PR29 reporting and FFATA submissions were primarily attributable to departmental vacancies and resource constraints during the fiscal year. Additionally, the monitoring is inadequate to consistently ensure timely reporting. Further, the City did not have a contingency plan in place to ensure continuity of reporting responsibilities during periods of staffing changes or absences, which contributed to the delays. Effect or Potential Effect: The City was not in compliance with the programs’ reporting requirements. Questioned Costs: Not applicable. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: None noted. Recommendation: We recommend that the City enhance its internal controls over federal reporting by strengthening monitoring procedures to ensure PR29 and FFATA reports are completed and submitted timely. The City should implement a structured reporting process, including a tracking mechanism and defined timelines, to support consistent compliance. In addition, the City should develop and implement a contingency plan, including the designation of backup personnel, to ensure continuity of reporting responsibilities during periods of staffing changes or resource constraints.View of Responsible Officials: The City will review its internal controls over federal reporting requirements, we will work with current consultants so that they can provide guidance on the required reporting on federal grants they assist with monitoring, and we will implement a tracking mechanism to ensure assigned staff are aware of all the reporting requirements with required submittal timelines.